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Chipotle Stock: Underrated Growth Opportunity?

With so many recent closures, many restaurants are looking to expand and fill the new gaps in the market. Let’s take a look at Chipotle stock.
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The COVID-19 pandemic was an incredibly difficult time to be in the restaurant industry. The pandemic caused staffing shortages, supply chain restrictions and higher food costs. Not to mention that customers weren’t even allowed to sit in a restaurant for the better part of a year. But, what’s interesting is that these issues mainly impacted single-location restaurants. Chain restaurants, on the other hand, such as Chipotle stock, didn’t struggle quite as much. In fact, as we start to put the pandemic behind us, many chain restaurants are getting back into growth mode. In particular, Chipotle stock is looking to expand rapidly.

During the pandemic, about 90,000 restaurants permanently shut their doors. Most of these restaurants had just one or two locations. These smaller operations just didn’t have the cash on hand to keep the lights on during this difficult time. Or, they didn’t have the customer base to go mobile-only.

Large chain restaurants, on the other hand, were able to weather the pandemic thanks to a few key advantages. During COVID-19, large chains were able to lean on parent companies for cash flow and guidance. They also have economies of scale which makes mobile ordering more profitable, even with smaller margins.

With so many closures in the past year, many restaurant chains are looking to expand and fill the new gaps in the market. With that in mind, let’s take a look at one of the most promising Mexican-style fast-casual restaurants: Chipotle (NYSE: CMG).

Chipotle’s Business

If you’ve never been, Chipotle is a popular Mexican chain restaurant. It mainly operates in the U.S. with 2,918 domestic locations and 44 international locations. Chipotle is known for having a simple menu, as most Mexican restaurants do. Customers can enjoy burritos, tacos, or bowls that are made to order in front of them.

In 2021, Chipotle stock brought in annual revenue of $7.55 billion. This was a year-over-year increase of 26%. It also reported a net income of $653 million, up 83% YoY.

More recently, Chipotle reported a stellar Q1 2022. In Q1, the burrito chain reported total revenue of $2 billion, up 16% YoY. Notably, same-store sales also increased by 33%. This means that each store reported a 33% increase in sales compared to the previous year (on average). This is a closely-watched metric for businesses with multiple locations.

Chipotle also has decided to aggressively build more locations. It previously set a goal of 6,000 total locations but upped this number to 7,000. Management likely made this decision because it knows that there are fewer local restaurants to compete with. In Q1, Chipotle opened up 51 new locations and plans to open 250 more in 2022.

CEO Brian Niccol was pleased with these financial results and stated, “Chipotle’s performance in the first quarter was strong, despite challenges from the Omicron variant and ongoing inflation.”

Offering Customers More Ways to Pay

It’s also worth noting that Chipotle will now let customers buy burritos with cryptocurrency. To make this possible, the Tex-Mex chain inked a partnership with Flexa. This allows it to accept 98 different digital currencies including Bitcoin, Ether and Solana.

A few other companies have made a similar move to accept crypto. AMC and Tesla are the first two that come to mind. More often than not, this move feels more like a marketing ploy than a strategic business decision. While the future of crypto is bright, it is still not widely used as a currency. It’s tough to imagine someone going out of their way to buy a burrito with Bitcoin.

However, there is something to be said for Chipotle stocks desire to enhance its customer experience. Cryptocurrency could eventually provide a faster checkout and more payment flexibility. All of this will help to enhance the checkout experience for customers.

While it’s not that big of a deal (yet), there also really isn’t any downside to Chipotle accepting cryptocurrency.

Is Chipotle Stock a Buy?

I usually stray away from providing direct “yes” or “no” answers to questions like this. Usually, I prefer to highlight the positive and negative aspects and let you choose for yourself. However, for the long-term investor, Chipotle stock definitely has a solid case to be a winner.

To start, Chipotle has a lot of significant advantages over other restaurants.

  1. Speed: Chipotle absolutely whisks customers in and out. BUT, it’s also not fast food. Since it only serves a few food options it just cooks these in bulk to get you your food quickly.
  2. Cheap: This will become a bigger value prop as inflation squeezes consumer spending power.
  3. Relatively healthy: Chipotle is generally the healthier choice over McDonald’s, Wendy’s, or other fast food options.
  4. It’s delicious: You already know this is if you’ve ever had Chipotle.

With these four factors in mind, it’s no wonder that customers keep on coming back to Chipotle. Chipotle is also a very attractive choice for specific demographics. Examples include broke college students and families looking to dine on a budget.

Underrated Growth Opportunity for Chipotle Stock

Despite its popularity in the U.S., Chipotle stock still has plenty of room to expand. In fact, it has much more potential than investors give it credit for.

Remember, 90,000 restaurants went out of business in 2022. Chipotle can easily build more locations to absorb this market share. The fact that same-store sales grew 33% in Q1 might already be a sign that customers have fewer food options and are flocking to Chipotle. On top of that, Chipotle hasn’t even begun to expand overseas.

The overwhelming bulk of Chipotle locations are in the United States. It has just 44 international locations. You’d have to imagine that, at some point, it will start expanding to Canada, Europe, Asia, etc. This is a very underrated part of Chipotle’s business. In fact, it’s not uncommon for companies that are mature in the U.S. to get a second wind in overseas markets. For example, 50% of McDonald’s sales in 2021 came from overseas locations.

Granted, management hasn’t specifically stated that the company will expand overseas. But, either way, growth is clearly a major priority. Chipotle plans to expand to 7,000 locations total. For reference, the fast-food giant McDonald’s has 13,683 locations. If Chipotle can dominate the new gaps in the U.S. market and eventually set its sights to foreign countries then Chipotle stock will almost definitely be a winner.

I hope you’ve found this article on Chipotle stock to be valuable! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post Chipotle Stock: Underrated Growth Opportunity? appeared first on Investment U.

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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